Sunday, May 19, 2013

Its not 'if' but 'when' this house of cards will come down

Excellent article by Liam Halligan, which although it doesn't mention it, should give you a good reason not to throw in the towel and buy a house. Its not about 'if' its about 'when' this house of cards will start falling down. for those of us who are questioning whether we got it all completely wrong and rising house prices are gold plated, this is a good reminder that the current world economies are living in an illusion and it can't go on forever.

4 Comments

1. libertas said...

When is an important question with houses. We know it will collapse, but when? Certainly it depends where you are. Some places you can get a decent house for £150k. I'm a bit more concerned about the London area, which is more dependent on leverage. Certainly, if the housing collapse takes place in five years, if I've paid of £15k of a house, and it falls from £150k to £120k, I may not care, if this is my home for a long time.

It all depends on circumstance and location, and whether you wish to procreate, since it is not fun having a family in rented accommodation, and do remember, that it is important to pay off your home before retirement.

2. britishblue said...

I live in London. In the last few years international quantitative easing has put up the cost of buying a house, renting a house, heating the house and the food I buy for that house. In london more than anywhere in the country there has been a shift in wealth from property owning people to non property owners. In places like Richmond upon Thames, over 50% of properties are being bought by foriegn buyers over email, without ever having visited the property. the market is no longer a property market, it is becoming a commodity market. Whereas in a normal housing market there is a slow burn downwards, with only people that have to sell lowering their prices ( divorce, probate, job loss, etc) commodity markets are different. When this sugar loading ends, it will be interesting to see what effect it will have on the vast swathes of foriegn investors in the london market and what deleveraging will take place

3. stuartking said...

This tells us that the only companies worth investing in are those with strong balance sheets. It's going to get to the stage where the 'too big to fail' will have to be allowed to fail because governments, aka taxpayers, no longer have the ability to bail them out. That is something that should have been allowed to happen from the start of the 'financial crisis'. - Capitalism red in tooth and claw.

The only role for government should have been to pick up the pieces on the cheap and distribute the dividends to the taxpayers.